What's happening
This bill requires insurance policies to provide equal reimbursement and terms for mail order and retail pharmacies, and mandates replacement of spoiled or damaged prescription drugs.
Why it matters
Levels the playing field for pharmacies. By requiring insurers to use the same reimbursement benchmarks and contractual terms for both mail order and retail pharmacies, the bill aims to remove financial incentives that currently favor mail order over local pharmacies. This could help preserve consumer choice and support community pharmacies.
Enhances price transparency and stability. The bill mandates clear disclosure of the pricing benchmarks (like Average Wholesale Price or Maximum Allowable Cost) and requires monthly updates and advance notice of changes. This transparency allows pharmacies to better anticipate reimbursement rates and manage their inventory and finances.
Protects patients from restrictive insurance practices. Insurers would be prohibited from imposing additional fees, higher copays, or refill frequency requirements (like forcing monthly refills) on patients who choose retail pharmacies over mail order, so long as the prescription is written for a longer supply. This ensures patients aren’t penalized for choosing local pharmacies.
Improves consumer protections for damaged prescriptions. The bill obligates mail order pharmacies to promptly replace spoiled or damaged prescription drugs (including fertility medications), even before the damaged product is returned, and does not cap the number of replacements per year. This addresses a significant concern for patients relying on timely medication delivery, especially for temperature-sensitive or life-critical drugs.
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Who cares
Headline styles
Equal Pharmacy Drug Coverage
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to insurance
- Referred to insurance
Full text
10 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1766
2017-2018 Regular Sessions
IN SENATE
January 10, 2017
Introduced by Sens. GOLDEN, ADDABBO, LANZA, O'MARA -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to reimbursements to mail order pharmacies
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraphs 13-a and 28 of subsection (i) of section 3216 of the insurance law, paragraph 13-a as amended by chapter 10 of the laws of 2012, paragraph 28 as amended by chapter 11 of the laws of 2012, are amended to read as follows:
(13-a) (A) Definitions. For the purposes of this paragraph:
(1) "Same reimbursement amount" shall mean that any coverage described under subparagraph (B) of this paragraph shall use the same singular benchmark index, which may be average wholesale price, maximum allowable cost, federal upper limit, or another similar benchmark index used by the insurance industry, and national prescription drug codes to reimburse all pharmacies participating in the insurance network for all prescriptions regardless of whether a pharmacy is a mail order pharmacy or a non-mail retail order pharmacy, provided, however, that when the selected benchmark index does not include one or more particular prescription drugs, a hierarchy of benchmark indices shall be used in their hierarchical order and such secondary index shall be used to provide pricing for only those drugs not included in the main index. If the two selected benchmarks do not include one or more particular prescription drugs, a third benchmark index shall be used to provide pricing only for those drugs not included in the main index or secondary index. All participating network pharmacies, non-mail order retail pharmacies and mail order pharmacies, shall receive a disclosure of the reimbursement hierarchy, the current benchmark prices for the indices included in the hierarchy, and monthly updates to the benchmark prices
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05109-01-7
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for each of the hierarchical indices. Any change to the hierarchical benchmark structure shall not be made unless notice of such change has been provided to all participating network pharmacies at least thirty days in advance of such change.
(2) "Mail order pharmacy" shall mean a pharmacy whose primary business is to receive prescriptions by mail, telefax or through electronic submissions and to dispense medication to patients through the use of the United States mail or other common or contract carrier services and provides any consultation with patients electronically rather than faceto-face.
(3) "Standard terms and conditions" shall mean the contractual terms and conditions applicable to all network non-mail order retail pharmacies, provided, however that for mail order prescriptions that are subject to the federal drug administration risk evaluation and mitigation strategies program, the insurance policy may impose an additional term and condition requiring documentation stating that the pharmacy is authorized to dispense such mail order prescription before a non-mail order retail pharmacy may be reimbursed for dispensing such mail order prescription drug.
(B) Every policy that provides coverage for prescription fertility drugs and requires or permits prescription drugs to be purchased through a network participating mail order or other non-retail pharmacy shall provide the same coverage for prescription fertility drugs and shall not limit the supply that may be dispensed to a thirty-day supply when such drugs are purchased from a network participating non-mail order retail pharmacy provided that the network participating non-mail order retail pharmacy agrees [in advance through a contractual network agreement,] to the same reimbursement amount[, as well as the same applicable terms and conditions,] and standard terms and conditions that the insurer has established for [a] network participating [mail order or other non-retail pharmacy] non-mail order retail pharmacies. In such case, the policy shall not impose any fee, co-payment, co-insurance, deductible or other condition, including requiring monthly refills of a prescription that was written for and may be filled for more than a thirty-day supply, on any insured who elects to purchase prescription fertility drugs through a network participating non-mail order retail pharmacy that it does not impose on any insured who purchases prescription fertility drugs through a network participating mail order or other non-retail pharmacy.
(C) Any policy that provides coverage for prescription fertility drugs shall require mail order pharmacies to replace dispensed prescription fertility drugs that have spoiled or damaged, provided that, the policy may require that the spoiled or damaged prescription fertility drug be returned to the mail order pharmacy with the cost to be borne by such pharmacy, and provided further that such spoiled or damaged prescription fertility drug shall be replaced in an amount that is not less than a one month supply before receipt of the returned spoiled or damaged prescription fertility drug. If the spoiled or damaged prescription fertility drug is not returned, the policy may require the insured to reimburse the policy for the cost of the prescription fertility drug and, notwithstanding the foregoing, when an insured who was previously required to reimburse the insurance policy for a dispensed prescription fertility drug that was spoiled or damaged, the policy may refuse to replace such prescription fertility drug for such insured until such insured has returned the spoiled or damaged prescription fertility drug. Replacement of a prescription fertility drug pursuant to this subpara-
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graph shall not be limited to a specific number of occurrences during a contract year.
(28) (A) Definitions. For the purposes of this paragraph:
(1) "Same reimbursement amount" shall mean that any coverage described under subparagraph (B) of this paragraph shall use the same singular benchmark index, which may be average wholesale price, maximum allowable cost, federal upper limit, or another similar benchmark index used by the insurance industry, and national prescription drug codes to reimburse all pharmacies participating in the insurance network for all prescriptions regardless of whether a pharmacy is a mail order pharmacy or a non-mail order retail pharmacy, provided, however, that when the selected benchmark index does not include one or more particular prescription drugs, a hierarchy of benchmark indices shall be used in their hierarchical order and such secondary index shall be used to provide pricing for only those drugs not included in the main index. If the two selected benchmarks do not include one or more particular prescription drugs, a third benchmark index shall be used to provide pricing only for those drugs not included in the main index or secondary index. All participating network pharmacies, non-mail order retail pharmacies and mail order pharmacies, shall receive a disclosure of the reimbursement hierarchy, the current benchmark prices for the indices included in the hierarchy, and monthly updates to the benchmark prices for each of the hierarchical indices. Any change to the hierarchical benchmark structure shall not be made unless notice of such change has been provided to all participating network pharmacies, non-mail order retail pharmacies and mail order pharmacies, at least thirty days in advance of such change.
(2) "Mail order pharmacy" shall mean a pharmacy whose primary business is to receive prescriptions by mail, telefax or through electronic submissions and to dispense medication to patients through the use of the United States mail or other common or contract carrier services and provides any consultation with patients electronically rather than faceto-face.
(3) "Standard terms and conditions" shall mean the contractual terms and conditions applicable to all network non-mail order retail pharmacies, provided, however that for mail order prescriptions that are subject to the federal drug administration risk evaluation and mitigation strategies program, the insurance policy may impose an additional term and condition requiring documentation stating that the pharmacy is authorized to dispense such mail order prescription before a non-mail order retail pharmacy may be reimbursed for dispensing such mail order prescription drug.
(B) Any policy that provides coverage for prescription drugs shall permit each insured to fill any covered prescription that may be obtained at a network participating mail order or other non-retail pharmacy, at the insured's option, at a network participating non-mail order retail pharmacy provided that the network participating non-mail order retail pharmacy agrees [in advance, through a contractual network agreement,] to the same reimbursement amount[, as well as the same applicable terms and conditions,] and standard terms and conditions that the insurer has established for the network participating [mail order or other non-retail pharmacy] non-mail order retail pharmacies. In such a case, the policy shall not impose a co-payment fee or other condition, including requiring monthly refills of a prescription that was written for and may be filled for more than a thirty-day supply, on any insured who elects to purchase prescription drugs from a network participating non-
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mail order retail pharmacy which is not also imposed on insureds electing to purchase drugs from a network participating mail order or other non-retail pharmacy.
(C) Any policy that provides coverage for prescription drugs shall require mail order pharmacies to replace dispensed prescription drugs that have been spoiled or damaged, provided that, the policy may require that the spoiled or damaged prescription drug be returned to the mail order pharmacy with the cost to be borne by such pharmacy, and provided further that such spoiled or damaged prescription drug shall be replaced in an amount that is not less than a one month supply before receipt of the spoiled or damaged prescription drug. If such spoiled or damaged prescription drug is not returned, the policy may require the insured to reimburse the policy for the cost of the prescription drug and, notwithstanding the foregoing, when an insured who was previously required to reimburse the policy for a dispensed spoiled or damaged prescription drug, the policy may refuse to replace such prescription drug for such insured until such insured has returned the spoiled or damaged prescription drug. Replacement of a prescription drug pursuant to this subparagraph shall not be limited to a specific number of occurrences during a contract year.
§ 2. Subparagraph (D) of paragraph 6 of subsection (k) of section 3221 of the insurance law, as amended by chapter 10 of the laws of 2012, is amended to read as follows:
(D) (i) Definitions. For the purpose of this paragraph:
(1) "Same reimbursement amount" shall mean that any coverage described under item (ii) of this subparagraph shall use the same singular benchmark index, which may be average wholesale price, maximum allowable cost, federal upper limit, or another similar benchmark index used by the insurance industry, and national prescription drug codes to reimburse all pharmacies participating in the insurance network for all prescriptions regardless of whether a pharmacy is a mail order pharmacy or a non-mail retail order pharmacy, provided, however, that when the selected benchmark index does not include one or more particular prescription drugs, a hierarchy of benchmark indices shall be used in their hierarchical order and such secondary index shall be used to provide pricing for only those drugs not included in the main index. If the two selected benchmarks do not include one or more particular prescription drugs, a third benchmark index shall be used to provide pricing only for those drugs not included in the main index or secondary index. All participating network pharmacies, non-mail order retail pharmacies and mail order pharmacies, shall receive a disclosure of the reimbursement hierarchy, the current benchmark prices for the indices included in the hierarchy, and monthly updates to the benchmark prices for each of the hierarchical indices. Any change to the hierarchical benchmark structure shall not be made unless notice of such change has been provided to all participating network pharmacies, at least thirty days in advance of such change.
(2) "Mail order pharmacy" shall mean a pharmacy whose primary business is to receive prescriptions by mail, telefax or through electronic submissions and to dispense medication to patients through the use of the United States mail or other common or contract carrier services and provides any consultation with patients electronically rather than faceto-face.
(3) "Standard terms and conditions" shall mean the contractual terms and conditions applicable to all network non-mail order retail pharmacies, provided, however that for mail order prescriptions that are
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subject to the federal drug administration risk evaluation and mitigation strategies program, the insurance policy may impose an additional term and condition requiring documentation stating that the pharmacy is authorized to dispense such mail order prescription before a non-mail order retail pharmacy may be reimbursed for dispensing such mail order prescription drug.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to reimbursements to mail order pharmacies
Purpose or general idea of bill
To clarify and strengthen provisions in current law to ensure that consumers have the option to access every covered medication from a local network participating pharmacy and are not forced to use a mail order pharmacy.
Summary of provisions
Section one of this bill amends paragraphs (13-a) and (28) of Insurance Law section 380(i) to provide new terms with corresponding definitions and to remove certain requirements that have become impediments to the Legislature's intent in this area. The new defined terms are "same reimbursement amount," "mail order pharmacy," and "standard terms and conditions." The amendment to these paragraphs also provides that when a prescription has been written for and may be filled for more than a 30-day supply, the insurance policy may not impose an additional fee, co-pay or other cost that would exceed the amount that would be paid to a mail order pharmacy for a supply in excess of 30 days.
Read the full memo (1,241 words)
Finally, the amendment provides that if a mail order shipment for which the mail or carrier service has documentation of delivery was not received by the insured or was damaged or spoiled in the delivery process, the mail order pharmacy must replace the prescription without any additional charge to the insured, provided that the insured complies with any requirements imposed by the plan. In the case of spoiled or damaged prescriptions, the policy may require that the insured return such spoiled or damaged prescriptions to the mail order pharmacy, which will bear the cost of such returns. If the insured fails to comply with the return requirement, the policy may require the insured to reimburse the policy for the cost of the prescription. Prescriptions must be replaced before return of a spoiled or damaged prescription, unless the insured was previously required to reimburse the policy for an undelivered, damaged or spoiled prescription and in that case, the policy may wait until it receives a copy of the police report or the damaged or spoiled prescription before sending the replacement to the insured.
Regarding the removal of provisions in the current law, this amendment removes the requirements that a non-mail order retail pharmacy agree "in advance through a contractual network agreement" to the same "terms and conditions" as those imposed on network mail order pharmacies and other non-retail pharmacies. These provisions are being removed because they have served to impose extra requirements on network community pharmacies as a precondition for providing certain covered medications otherwise available by mail order.
Section two of this bill amends Insurance Law section 3221(k)(6)(D) in the same manner as the amendments provided in section one of this bill.
Section three of this bill amends Insurance Law section 3221(1)(18) in the same manner as the amendments provided in section one of this bill.
Section four of this bill amends Insurance Law section 4303(s)(4) in the same manner as the amendments provided in section one of this bill.
Section five of this bill amends Insurance Law section 4303(kk) in the same manner as the amendments provided in section one of this bill.
Section six of this bill provides severability language.
Section seven of this bill provides this act shall take effect immediately.
Existing law and justification
In January 2012, the current provisions of Insurance Law took effect guaranteeing that consumers would always have the choice of obtaining covered prescription drugs from a local network participating pharmacy.
Over the course of the years since then, it became clear that the law was not working as intended. Consumers received letters from pharmacy benefit managers directing them to out-of-state "specialty" pharmacies. Consumers returning to their local participating pharmacy could no longer obtain their prescription drugs there because the claim was blocked. The pharmacy was notified that coverage for that medication was no longer covered in the "retail" pharmacy network. The patient was to be directed to the "specialty" pharmacy.
Contrary to the intent of the law, beneficiaries are forced into mandatory mail order programs based upon the medications that they are prescribed. These medications are being deemed to be "specialty" medications and, thus, cannot be filled at a non-specialty retail pharmacy. Local pharmacies in the network were not considered "specialty" pharmacies and, thus, were excluded from the new "restricted" network. This allowed pharmacy benefit managers to steer prescription volume out of the network retail pharmacies into their wholly owned pharmacy subsidiaries. Defining "mail order pharmacy" is necessary so that its meaning cannot be manipulated by self-promoting pharmacy benefit managers.
Community pharmacy owners took action. They contacted plan sponsors and pharmacy benefit managers asking for contracts that would allow them to continue to dispense covered medications available to them from their wholesalers. The phone calls, letters, and e-mails that followed document that large pharmacy benefit managers were using "terms and conditions" as a legal roadblock against community pharmacies. These included unreasonable and onerous "terms" such as costly accreditations, on-call 24- hour nursing services, and excessive liability insurance demands. Some threatened to exclude community pharmacies from the retail network in order to be enrolled as a mail order pharmacy. For these reasons, it is necessary to remove "terms and conditions" from current law.
The term "in advance through a contractual network agreement" has served as another roadblock to the community pharmacies envisioned in the original law. A close reading of the law allows a local network pharmacy to agree to accept the same reimbursement amount, but nothing in the law requires the pharmacy benefit manager to grant the participating community pharmacy an additional contract to meet the mail order reimbursement price. The present statute must be amended to resolve this contradiction and restore the original legislative intent.
Consumers have had many issues with mail order pharmacies. When medication requires refrigeration, spoilage is an issue for consumers. Because many consumers are employed and cannot control the time that the medication will be delivered, medication that requires refrigeration could be left outside in the sun for an extended period of time melting whatever cold packaging was included to keep the medication refrigerated.
Additionally, many medications have been lost in the mail or stolen. When medication that a person relies on in order to maintain his or her health is lost or stolen, that person's health is placed at risk. This risk is intensified by the fact that the only replacement option is the mail order pharmacy, which means that the replacement medication may not arrive for days. Because many prescriptions cannot be refilled more than one week ahead of time, a person could run out of the medication while he or she waits for a second delivery. While it could be argued that the person could simply wait at home for the medication to be delivered, this argument ignores some practical realities such as employment and the inability to simply take a day off from work to wait for a package to be delivered.
The original intent of the law has been distorted. With these amendments, the original legislative intent will be restored. Consumers will finally have the ability to use in-network community pharmacies for their prescriptions, regardless of whether the medication is considered to be a "specialty" medication.
Prior legislative history
2016: S.7591-C - Referred to Insurance
Fiscal implications
Undetermined.
Effective date
This act shall take effect immediately.
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